A petition by majority shareholders complaining oppression by minority

(ii) A petition by majority shareholders complaining oppression by minority
shareholders. [C.A. (Final) Nov., 1995J

!iLns .

Meaning of Oppression
Please see answer to Q. 2 (a).
Oppression of Minority Directors
The oppression dealt with under Section 397 is only oppression of members in his capacity as a member and not in any other capacity. In Kalinga Tubes Ltd. Vs. Shanti Pd. Jain (1964), it was observed that "oppression involves at least an element of lack of probity or fair dealing to a member in the matter of his right as a shareholder". Again, in Lundi Bros. Ltd. Re a minority shareholder of a private company was removed from his position as a Working Director. As an ordinary shareholder he would have gained nothing as the company had never paid any dividend, Directors' remuneration being the only return on investment. Yet he could not complain of it because he had suffered as a Director and not as a member. Thus, to constitute oppression, persons concerned with the management of the company's affairs must in connection therewith be guilty of fraud, misfeasance or misconduct towards the members. It does not include mere domestic disputes between Directors themselves. In Ballador Silk Ltd., Re, it was held that if the majority of the Board of Directors override the minority Directors, the latter cannot resort to Section 397 and hence the minority Directors will not succeed in getting relief from CLB on the ground of oppression.

Oppression of Majority
It may be noted that remedies against oppression or mismanagement are available not .only to the minorities but, in an appropriate case, if the Court is satisfied about the acts of oppression or mismanagement, relief can be granted even if the application is made by a majority, who have been rendered completely ineffective by the wrongful acts of minority group. In Sindhri Iron Foundry (P) Ltd. Re (1964), the Calcutta High Court observed that Sections 397 and 398 nowhere prescribe that the application under the two Sections can be made only by a minority group. Nor do they prescribe that a majority group can under no circumstances come to court for redress, whatever may be the nature and extent of the oppressive acts of the rival group and whatever may be the extent of the injury suffered by the company as a result of the activities of such a group. Justice Mitra further observed that if the court finds that the company's interest is being seriously prejudiced by the activities of one or other group of shareholders; that two different registered offices at two different addresses have been set up; that two rival boards are holding meetings; that the company's business, property and assets have passed into the hands of unauthorised persons who have taken wrongful possession and who claim to be shareholders and Directors; that the bank accoUnts of the company have been practically frozen, there is no reason why the Court should not make appropriate orders to put an end to such matters;
. Likewise, in Dr. V. Sebastian Vs. City Hospital (P) Ltd. (1985), the Kerala High Court observed that "it is true that Sections 397 and 398 are intended primarily to protect the minority interests. In ordinary cases, the majority will be able to protect itself by controlling the Directors at general body meetings. But, where the Ir-ajority is